MARK ANTHONY ESTEBAN (in substitution of the
16 The CA
deceased GABRIEL O. ESTEBAN), Petitioner,
vs.
SPOUSES RODRIGO C. MARCELO and CARMEN T.
MARCELO, Respondents.
The Facts
The late Gabriel O. Esteban, substituted by his son,
petitioner Mark Anthony Esteban,4 had been in possession
of a piece of land located at 702 Tiaga St., Barangka Drive,
Mandaluyong City, since the 1950s.5 In the 1960s, the late
Esteban's sister constructed a foundry shop at the property.
In the 1970s, after the foundry operations had proven
unproductive, the respondents-spouses Rodrigo and
Carmen Marcelo were allowed to reside therein, for a
monthly rental fee of P50.00. Since March 2001, the
respondents-spouses have stopped paying the rental fee
(which by that time amounted to P160.00). On October 31,
2005, the late Esteban, through a lawyer, sent the
respondents-spouses a demand letter requiring them to
settle their arrears and to vacate within five (5) days from
receipt thereof.6 For failure to comply with the demand to pay
and to vacate, the late Esteban instituted an unlawful
detainer case against the respondents-spouses on
December 6, 2005.
The MeTC’s and RTC’s Rulings
In its April 23, 2009 decision,7 the Metropolitan Trial Court
(MeTC) ruled that there was a valid ground for ejectment;
with the jurisdictional demand to vacate complied with, the
respondents-spouses must vacate the property, pursuant to
paragraphs 1 and 2, Article 1673 of the New Civil Code,8 on
the grounds of expiration of the lease and nonpayment of
monthly rentals. The MeTC likewise ordered the
respondents-spouses to pay back rentals and rentals, plus
legal interest until they shall have vacated the property,
attorney’s fees and cost of the suit. On appeal, the Regional
Trial Court (RTC) fully affirmed the MeTC ruling.9
The CA Ruling
The respondents-spouses appealed the RTC’s ruling to the
CA.
In its January 17, 2011 decision,10 the CA reversed the RTC.
The CA ruled that from the year of dispossession in 2001
when the respondents-spouses stopped paying rent, until
the filing of the complaint for ejectment in 2005, more than a
year had passed; hence, the case no longer involved an
accion interdictal11 cognizable by the MeTC, but an accion
publiciana12 that should have been filed before the
RTC.13 Therefore, the MeTC had no jurisdiction over the
case so that its decision was a nullity. Likewise, the Court
ruled that the respondents-spouses cannot be evicted as
they are protected by Section 6 of Presidential Decree No.
(P.D.) 1517.14 Finally, the CA ruled that the respondents-
spouses qualifies as beneficiary under Section 16 of
Republic Act No. (RA) 7279.15
In its July 15, 2011 resolution, the CA denied the
respondents-spouses’ partial motion for reconsideration
anchored on the petitioner’s failure to effect a substitution of
parties upon the death of the late Esteban. The CA reasoned
out that mere failure to substitute a deceased party is not a
sufficient ground to nullify a trial court’s decision.
also reiterated its finding against the petitioner that since the
time of dispossession, more than one year had passed;
hence, the case was an accion publiciana that should have
been commenced before the RTC.17
The Parties’ Arguments
The petitioner filed the present petition for review on
certiorari to assail the CA rulings. The petitioner argues that
the case has been properly filed as an accion interdictal
cognizable by the MeTC and was filed on December 6,
2005, or within the one-year prescriptive period counted from
the date of the last demand on October 31, 2005; hence, the
MeTC had proper jurisdiction over the case.
The petitioner further argues that contrary to the CA’s
findings, the failure to pay did not render the possession
unlawful; it was the failure or refusal to vacate after demand
and failure to pay that rendered the occupancy unlawful.18
The petitioner likewise points out that the respondents-
spouses are not covered by P.D. 1517 as there was no
showing that the subject lot had been declared an area for
priority development or for urban land reform.
Finally, the petitioner avers that it was improper for the CA to
rule that the respondents-spouses are qualified beneficiaries
under the RA 7279 as this point was not in issue and should
not have been covered by the appellate review.
In their comment to the petition,19 the respondents-spouses
claim that the substitution of petitioner was irregular as the
other compulsory heirs of the late Esteban had not been
made parties to the present case.
The Court’s Ruling
The Court finds the petition meritorious.
The one-year prescription period
is counted from the last demand
to pay and vacate
As correctly pointed out by the petitioner, there should first
be a demand to pay or to comply with the terms of the lease
and a demand to vacate before unlawful detainer arises. The
Revised Rules of Court clearly so state.20
Since 1947, case law has consistently upheld this rule.
"Mere failure to pay rents does not ipso facto make unlawful
tenant's possession of the premises. It is the owner's
demand for tenant to vacate the premises, when the tenant
has failed to pay the rents on time, and tenant’s refusal or
failure to vacate, which make unlawful withholding of
possession." In 2000, we reiterated this rule when we
declared: "It is therefore clear that before the lessor may
institute such action, he must make a demand upon the
lessee to pay or comply with the conditions of the lease and
to vacate the premises. It is the owner’s demand for the
tenant to vacate the premises and the tenant’s refusal to do
so which makes unlawful the withholding of possession.
Such refusal violates the owner’s right of possession giving
rise to an action for unlawful detainer."22
Furthermore, in cases where there were more than one
demand to pay and vacate, the reckoning point of one year
for filing the unlawful detainer is from the last demand as the
lessor may choose to waive his cause of action and let the
defaulting lessee remain in the premises.23
P.D. 1517 does not apply: in the
absence of showing that the
subject land has been declared
and classified as an Area for
Priority Development and as a
Land Reform Zone
It was an error for the CA to rule that the respondents-
spouses could not be ousted because they were protected
by P.D. 1517. This decree, in fact, does not apply to them.
In Sps. Frilles v. Sps. Yambao,24 the Court traced the
purpose, development and coverage of P.D. 1517. The
Court declared in this case that the purpose of the law is to
protect the rights of legitimate tenants who have resided for
10 years or more on specific parcels of land situated in
declared Urban Land Reform Zones or Urban Zones, and
who have built their homes thereon. These legitimate
tenants have the right not to be dispossessed and to have
the right of first refusal to purchase the property under
reasonable terms and conditions to be determined by the
appropriate government agency.25
Subsequent to P.D. 1517, then President Ferdinand Marcos
issued Proclamation No. 1893 on September 11, 1979,
declaring the entire Metropolitan Manila area an Urban Land
Reform Zone for purposes of urban land reform. On May 14,
1980, he issued Proclamation No. 1967, amending
Proclamation No. 1893 and identifying 244 sites in
Metropolitan Manila as Areas for Priority Development and
Urban Land Reform Zones. The Proclamation pointedly
stated that: "the provisions of P.D. Nos. 1517, 1640 and
1642 and of LOI No. 935 shall apply only to the above-
mentioned Areas for Priority Development and Urban Land
Reform Zones."
"Thus, a legitimate tenant's right of first refusal to purchase
the leased property under P.D. No. 1517 depends on
whether the disputed property in Metropolitan Manila is
situated in an area specifically declared to be both an Area
for Priority Development and Urban Land Reform Zone."26
Based on the cited issuances, we find it clear that for P.D.
1517 to apply, the tenants must have been a legitimate
tenant for ten (10) years who have built their homes on the
disputed property. These circumstances do not obtain in the
present case as it was not the respondents-spouses who
built their dwelling on the land; it was the late Esteban’s
sister who had the foundry shop built in the 1960s and
eventually leased the property to the respondents-spouses
in the 1970s. Even assuming that these two requirements
have been complied with, P.D. 1517 still will not apply as the
issue raised in the present petition is not the right of first
refusal of the respondents-spouses, but their non-payment
of rental fees and refusal to vacate. In fact, it was their non-
payment of rental fees and refusal to vacate which caused
the petitioner’s predecessor to file the action for unlawful
detainer.1âwphi1
Finally, even assuming that the aforementioned
circumstances were present, the respondents-spouses still
cannot qualify under P.D. 1517 in the absence of any
showing that the subject land had been declared an area for
priority development and urban land reform zone.
Issues not raised may not be
considered and ruled upon
The rule on the propriety of resolving issues not raised
before the lower courts cannot be raised on appeal: "points
of law, theories, issues and arguments not brought to the
attention of the trial court will not be and ought not to be
considered by a reviewing court, as these cannot be raised
for the first time on appeal. Basic consideration of due
process impels this rule."27
As the petitioner correctly observed, the respondents-
spouses never intimated, directly or indirectly, that they were
seeking the protection of RA 7279. Therefore, the CA did not
have any authority to rule that the respondents-spouses
qualified as beneficiaries under RA 7279.
Any one of the co-owners may
bring an action for ejectment
We see no merit in the respondents-spouses’ observation
that the present petition is irregular because the other
compulsory heirs (or co-owners) have not been impleaded.
The present petition has been properly filed under the
express provision of Article 487 of the Civil Code.28
In the recent case of Rey Catigador Catedrilla v. Mario and
Margie Lauron,29 we explained that while all co-owners are
real parties in interest in suits to recover properties, anyone
of them may bring an action for the recovery of co-owned
properties. Only the co-owner who filed the suit for the
recovery of the co-owned property becomes an
indispensable party thereto; the other co-owners are neither
indispensable nor necessary parties.
G.R. No. 176341 July 7, 2014
PRO-GUARD SECURITY SERVICES
CORPORATION, Petitioner,
vs.
TORMIL REALTY AND DEVELOPMENT
CORPORATION, Respondent.
DECISION
DEL CASTILLO, J.:
Contending that it is obliged to pay back rentals only from
the time the demand to vacate was served upon it and not
from the time it began occupying the disputed premises,
petitioner Pro-Guard Security Services Corporation
(ProGuard) seeks recourse to this Court.
This is a Petition for Review on Certiorari1 of the September
6, 2006 Decision2 of the Court of Appeals (CA) in CA-G.R.
SP No. 58867 which denied the Petition for Review filed
therewith by Pro-Guard as one of the petitioners. Likewise
assailed is the CA's Janu'!l)' 23, 2007 Resolution3 denying
the motion for reconsideration thereto.
Factual Antecedents
On July 24, 1984, Manuel A.Torres, Jr., (Manuel)assigned to
respondent Tormil Realty and Development Corporation
(Tormil) three parcels of land located in Pasay Cityand all
the improvements thereon in exchange for shares of stock in
the said corporation.4 Despite the assignment, however, title
to the real properties remained in Manuel’s name as he
neither registered the transaction in the Registry of Deeds
nor provided Tormil the necessary documents to have the
titles over the properties transferred inits name.
Later,Manuel unilaterally revoked the transaction.
Subsequently, Manuel, together with two other persons, one
of whom is Edgardo Pabalan (Edgardo), established Torres
Pabalan Realty, Incorporated (Torres-Pabalan). As part of
his capital contribution, Manuelassigned the same aforesaid
parcels of land to Torres-Pabalan.In the meantime,
construction of the Torres Building on the subject real
properties was completed in1985 and its units rented out.
Edgardo, who was also then the General Manager and
Administrator of Tormil, acted as the building administrator
and occupied the 2 nd floor. He later resigned from his
position inTormil in September 1986.
In March 1987, Tormil filed a case before the Securities and
Exchange Commission (SEC) docketed as SEC Case No.
31535 (SEC case) to compel Manuel to fulfill his obligation by
turning over the documents necessary to effect the
registration and transfer of titles in its name of the properties
assigned to it by Manuel.
Metropolitan Trial Court (MeTC) separate ejectment suits
against Edgardo and Augustus, and Pro-Guard16 which were
raffled to Branch44. The cases were later on consolidated. In
its complaints, Tormil stated that it deemed prudent to have
the ownership issue over the premises resolved first in the
SEC case before it filed the ejectment cases in order to
prevent complication. It thus averred that the occupancy by
defendants of units in Torres Building pending resolution of
the SEC Case was out of tolerance.
Edgardo and Augustus disputed Tormil’s ownership of the
parcels of land where the building stands and asserted that
Torres-Pabalan was the owner of the same. It was also the
onewho funded the building’s construction. Unfortunately, its
tax declarations over the building were surreptitiouslyand
unlawfully cancelled on the sole basis of the SEC Case. Pro-
Guard, for its part, claimed that it was paying rentals to the
owner,Torres-Pabalan, in the form of security services
provided to the latter. It likewise called attention to the fact
that it was no longer in the premises as Tormil forcibly
ousted ittherefrom.
Ruling of the Metropolitan Trial Court
The MeTC adjudged that Tormil has proven its right to
possess the property. Said court brushed aside the claim
that Torres-Pabalan owns the building since its SEC
Certificate of Registration was already cancelled, and that
the construction of the building was completed in July 1985
or prior to the time said corporation was incorporated in
September 1986. Finding the defendants’ occupancy of the
units as only upon Tormil’s tolerance, the MeTC concluded
that their possession became unlawful when Tormil decided
to assert its right of ownership over the building after the
ruling in the SEC case was upheld with finality by this Court.

Meanwhile, Edgardo continued to actas the administrator of

Thus, in its June 28, 1999 Decision,17 the MeTC ordered
Torres Building allegedly on behalf of Torres-Pabalan. He
Edgardo and Augustus to vacate the unit they possessed, as
then set up in October 1989 a law office (law office) with
well as topay attorney’s fees and costs. With respect to Pro-
Atty. Augustus Cesar Azura (Augustus) in the 2 nd floor of
Guard, it adjudged:
the building. Torres Building was thereafter declared by
Torres-Pabalan for tax purposes.6
2. ordering defendant Pro-Guard Security Services
Corporation and all persons claiming rights under
On March 6, 1991, the SEC rendered judgment in favor of
[it] to vacate and surrender possession of Unit M,
Tormil,7 and this was later affirmed by the SEC en
3rd Floor, Torres Building, 157 Buendia Ext., Sen.
banc.8 Manuel appealed to the CA. During the pendency
Gil Puyat Avenue, Pasay City;
thereof, Pro-Guard entered into an agreement with Edgardo
in March 1994 for the rentof a unit in the 3rd floor of Torres
Building. As payment, Pro-Guard was to provide security xxxx
servicesto Torres-Pabalan. Subsequently, the CA,9 and later
this Court,10 upheld the ruling in the SEC case such that it
4. ordering defendant Pro-Guard Security Services
became final and executory on December 12, 1997.11 By
Corp. to pay [Tormil] the fair and reasonable rental
October 1998, not only were the titles to the subject parcels
of the premises [in] the amount of P20,000.00 per
of land registered in Tormil’s name,12 but also the tax
month with legal interest from June, 1995 until the
declaration over the Torres Building.13
premises is fully vacated;18

On November 5, 1998, Tormil sent letters14 to Edgardo and

Contending that Tormil has no right to possess the building,
Augustus (for the law office) and Pro-Guard asking them to
the defendants appealed to the Regional Trial Court (RTC)
validate their possession/enter into a lease contract with
of Pasay City and the same was raffled to Branch 109
Tormil and at the same time settle their past and current
thereof. In the meantime, Pro-Guard informed the MeTC that
rentals. Since these letters were ignored, Tormil, on
it had already vacated the premises as early asMarch 20,
November 16, 1998 sent them separate demands to vacate
1999.19
the premises and pay the monthly rentalof P20,000.00 from
the time of their occupation thereof untilthe same are
actually turned over to Tormil.15 As these were unheeded, Ruling of the Regional Trial Court
Tormil asserting right of possession based on its ownership
of the Pasay properties, filed before the Pasay City
In its Decision20 dated December 15,1999, the RTC did not
find merit in the appeal, viz:
In view of the foregoing and pursuant to several decision[s]
of the Supreme Court and the provision of Rule 70 of the
Revised Rules of Court to the effect [that] the occupancy and
possession of the subject premises by the defendants-
appellants became illegal when they failed and refused to
heed the demand letters of herein plaintiff-appellee to vacate
the same and surrender possession peacefully, the Court
finds no cogent reason to reverse the decision of the trial
court and hereby affirms the same IN TOTO.
SO ORDERED.21
On appeal to the CA, Edgardo, Augustus and Pro-Guard
reiterated their arguments on Torres-Pabalan’s ownership of
the building and on its right to possess it.
Ruling of the Court of Appeals
The CA adjudged Tormil tohave sufficiently proven its case
for unlawful detainer. It held that based on its Torrens titles
over the subject parcels of land and the tax declarations over
the building thereon, Tormil has the right to possess the
disputed properties. It debunked the claim of Edgardo,
Augustus and Pro-Guard that the tax declarations in Tormil’s
nameare invalid, ratiocinating that their issuance by the
CityAssessor are presumed to have been regularly
performed.
Ultimately, the CA denied the petition and affirmed the RTC
Decision,22 viz:
WHEREFORE, PREMISESCONSIDERED, THE Petition is
DENIED DUE COURSE and ordered DISMISSED for lack of
merit. The Decision dated 15 December 1999 and Order
dated 02 May 2000 of the Regional Trial Court of Pasay City,
Branch 109 in Civil Case Nos. 99-0618 & 99-[0619] are
hereby AFFIRMED. Costs against petitioners.
SO ORDERED.23
In asking for a reconsideration, one aspect which Edgardo,
Augustus and Pro-Guard objected to was the order for them
to pay P20,000.00 monthly rental and the reckoning point of
payment. Pro-Guard, in its Supplemental Motion for
Reconsideration,24 argued that the CA should havemodified
the RTC judgment by reckoning the payment from the date
of Tormil’s notice to vacate.
The CA found no reason to reverse its judgment,25 impelling
Pro-Guard to elevate the case to this Court.
Issue
WHETHER THE [CA] ERRED WHEN IT AFFIRMED THE
DECISION OF THE [METC] AND THE [RTC] ON THE
AWARD OF THE [METC] IN RECKONING THE DATEOF
PAYMENT OF RENTALS IN THE AMOUNT OF P20,000.00
PER MONTH WITH LEGAL INTEREST FROM JUNE 1995
UNTIL THE PREMISES IS FULLY VACATED CONTRARY
TO PREVAILING LAW AND JURISPRUDENCE.26
Parties’ Arguments
Pro-Guard stresses that the CA erred in affirming the lower
courts’ award of P20,000.00 monthly rental reckoned from
the time it occupied the unit. It contends that it cannot be
blamed if it relied on the representations of TorresPabalan
when it entered into a lease contract with it, the latter being
then in possession of the building. Pro-Guard maintains that
in any case, it owes no unpaid rentals to Tormil for the entire
period of its stay in the building out of Tormil’s tolerance. On
the other hand, Tormil argues that Pro-Guard’s stay ‘out of
tolerance’ does not bar it from claiming arrears from the time
the latter occupied a unit in the building. It contends that the
demand to vacate was not for the purpose of counting the
reckoning period for payment of rental arrears, but only for
the purpose of counting the prescriptive period to file a case
for unlawful detainer. Besides, Pro-Guard’s rentalpayments
to Torres-Pabalan were not valid as the latter was not its
authorizedrepresentative. To it, Pro-Guard, fully aware of the
pending legal dispute between Tormil and Torres-Pabalan,
should have consigned the rental payments.
It would appear that Pro-Guard no longer impugns the
uniform rulings of the MeTC, RTC, and CA, on the right of
Tormil to possessthe subject premises. The only question it
brought before this Court is when to reckon its rental
payments.
Our Ruling
While indeed Tormil, as the victor inthe unlawful detainer
suit, is entitled to the fair rental value for the use and
occupation of the unit in the building, such compensation
should not be reckoned from the time Pro-Guard began to
occupy the same, but from the time of the demand to vacate.
"In unlawful detainer cases, the defendant is necessarily in
prior lawful possession of the property but his possession
eventually becomes unlawful upon termination or expiration
of his right to possess."27 In other words, the entry is legal
but the possession thereafter became illegal. Additionally,
the Rules of Court requires the filing of such action within a
year after the withholding of possession,28 meaning that "if
the dispossession has not lasted for more than one year,
[then] an ejectment proceeding (in this case unlawful
detainer) is proper x x x."29 Here, from the moment Pro-
Guard started to occupy the unit in March 1994 up to
November 15, 1998, the right ofPro-Guard to possess the
premises was not challenged. It was only after Tormil
prevailed over Manuel in its ownership of the same that it
terminated Pro-Guard’s right to possess the unit it was
occupying through a letter to vacate dated November 16,
1998. Hence, it is only from that point that Tormil is
considered to have withdrawn its tolerance of Pro-Guard’s
occupation. Conversely, Pro-Guard’s possession became
unlawful at that same moment. This is supported by the
allegation in the complaint for ejectment that Tormil initiated
the same not because of non-payment of rentals, but
because of withdrawal oftolerance. Tolerance or "[t]oleration
isdefined as ‘the act or practice ofpermitting or enduring
something not wholly approved of,"30 while tolerated acts are
"those which by reason of neighborliness or familiarity, the
owner of the property allowshis neighbor or another person
to do on the property; they are generally those particular
services or benefits which one’s property can give to another
without material injury or prejudice to the owner, who
permitsthem out of friendship or courtesy."31
With regard to the effects of withdrawal of tolerance, it is
settled that:

x x x A person who occupies the land ofanother at the

latter’s tolerance or permission, without any contract
between them, is necessarily bound by an implied promise
that he will vacate upon demand, failing which a summary
action for ejectment is the proper remedy against him. His
status is analogous to that of a lessee or tenant whose term
of lease has expired but whose occupancy continued by
tolerance of the owner. In such a case, the date of unlawful
deprivation or withholding of possessionis to be counted
from the date of the demand to vacate.32

Thus, in Sps. Jimenez v. Patricia, Inc.,33 the lessor ended its

tolerance of the sublessees’ occupation of the property and
demanded that they vacate the premises on March 29, 1995.
We upheld the ejectment of the sublessees and ordered
them to pay monthly rentals beginning April 1995 until they
vacate the premises. Indeed, it is inconsistent to demand
payment of rentals during the period of tolerance.

Incidentally, Tormil mentioned that Pro-Guard is obliged to

consign the payment of rentals. One legal cause for
consignation is when two ot more persons claim the same
right to collect.34 Various claimants to a debtor's payment
must have the appearance of a right to collect such that the
debtor would have a reasonable doubt, not based on
negligence, as to who is entitled to the payment.35

Whether Pro-Guard was indeed aware of the legal dispute

then pending before the SEC and subsequently before the
courts is of no moment. When the dispute regarding the
validity ofManuel's assignment to Tonnil of the realties was
pending before the SEC, Tormil did not claim to Pro-Guard
that it is the true owner of the premises. It neither sought
payment of rentals which it now claims Pro-Guard should
have consigned during the pendency of its suit against
Manuel. As such, from the viewpoint of Pro-Guard, the lease
contract remained to be then between it and Torres-Pabalan.
The latter was occupying and running the building, as
evidenced by several tax declarations in its name which,
while not conclusive proofs of ownership, nevertheless, are
good indicia of possession in the concept of
owner.36 Moreover, Edgardo, who claimed to act on behalf of
TorresPabalan, administered the premises. Pro-Guard is not
permitted to deny the title of his landlord at the time of the
commencement of the relation of landlord and tenant
between them.37